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Monday, March 4, 2013

How Stephen Berger merges hospitals into closure

Hospitals can be counted on to fail and close in the vicious market-based financing model that depends on decreasing insurance company reimbursement rates. Hospitals can also be counted on to fail and close if Stephen Berger ever mentions the word, "merger."

The hospitals in the network included St. Vincent's Hospital in Greenwich Village, St. Vincent's Hospital (Staten Island), Mary Immaculate Hospital in Queens, St. John's Queens Hospital, Saint Joseph's Hospital in Queens, St. Mary's Hospital of Brooklyn, and Bayley Seton Hospital in Staten Island.

The New York Times later reported that St. Vincent's began to immediately struggle from this large-scale merger

"The merger was seen as a way of consolidating costs and allowing the Catholic hospitals wrapped into the system to continue their mission of providing care for the poor and uninsured. But the landscape soon changed, and hospitals found themselves with too many beds, too few patients and less reimbursement from public and private insurers. At the same time, medical costs - from equipment to malpractice insurance - were skyrocketing." (Source 3)

By 2005, the combined losses and debts of the hospital chain were too much bear ; the hospital system filed for bankruptcy. The 2005 bankruptcy filing was described at the time as the largest hospital bankruptcy in New York. (Source 4)

What first began as a noble purpose to help the poor and uninsured, the hospital mega merger began to become unhinged due to losses and debts. Saint Vincent's Catholic Medical Centers of New York (SVCMCNY) began to unravel its huge mega merger, because the economics of the market-based hospital financing system was just too vicious to bear.

Two hospitals, in particular, had to be spun-off. After St. Vincent's incurred untold millions of dollars in debt to keep St. John's and Mary Immaculate operational, $25 million is debt had to be absolved when the two hospitals were packaged off to Wyckoff Heights in Brooklyn under a new umbrella company named Caritas Health Care. Combined, the two Queens hospitals lost $60 million in 2008, and the two hospitals began 2009 with another $27 million in debt. (Source 5a)

At each step, smaller community hospitals kept being shuffled between parent holding companies. Along with the hospital assets, each transaction also shoveled along all the hospitals' debts.

The investment banker Stephen Berger, who has been tasked with closing hospitals by a series of neo-con and neo-lib governors, learned that mergers or spin-offs turned out to be a sinister, backdoor way to destroy public hospitals or hospitals with charitable missions. Mr. Berger has a die-hard, profit-driven ethics, which is to say, he willingly subverts public health if there is a way to try to squeeze profits out of somebody else's medical suffering.

Hospitals set up as a public charity, with noble missions to serve the poor, like St. Vincent's, was an affront to Mr. Berger's mission to wage a scorched earth campaign against hospitals that served the uninsured : Mr. Berger has been wanting to set up more market-driven, profit driven hospital systems, so that profit-centered care could win over patient-centered care.

The sad tale of St. Vincent's turned from tragedy into insult in 2010, when it filed for bankruptcy a second time. "In a filing with the U.S. bankruptcy court in Manhattan, St. Vincent's said it has between $100 million and $500 million of assets, more than $1 billion of liabilities, and between 25,000 and 50,000 creditors. The hospital was founded in 1849 to serve the poor." (Source 5b) Its bankruptcy, this time, was partly caused by the Rudin family, who held mortgages on some of the hospital's real estate, as a backdoor way to take ownership of the hospital's valuable real estate in the trendy West Village section of Manhattan.

Because hospitals are treated as a business, they are left to fend for themselves in a vicious market-based financing model that keeps hospitals getting squeezed from all sides.

Dr. James Satterfield, president of the Medical Society for the County of Queens and vice chairperson of surgery for Caritas, began to see that there was a very fundamental financial challenge facing community hospitals. Dr. Satterfield suggested that state and federal officials help draft a "comprehensive plan" to assess how best to save hospitals from closing. "We must salvage these hospitals. We cannot continue to cripple the health care of Queens," Dr. Satterfield said, referring to the impending closing of St. John's Hospital Queens and Mary Immaculate Hospital -- the two hospitals that St. Vincent's had to cast off, after its first bankruptcy filing. "Physicians are losing their practices. Hospitals are dying essentially. We cannot let this start here and let the domino effect take place," Dr. Satterfield said. (Source 5c)

After having lost millions of dollars and incurred millions more in debts, and then bankruptcy spin-offs, St. John's Hospital Queens is now being prepared to be transformed into a mixed-use retail-apartment complex. (Source 5d) Meanwhile, St. Vincent's is being transformed into a billion-dollar luxury condominium and townhouse complex.

But the financial stretch that the 2000 St. Vincent's mega merger caused, the 2005 bankruptcy, and the 2007 reörganization that lead to the spin-off of St. John's Hospital Queens and Mary Immaculate Hospital never lead to a greater examination of Dr. Satterfield's concerns about the inadequacies in the market-based financing model for hospitals.

Instead, it would seem that the Department of Health, Gov. Andrew Cuomo, and Stephen Berger seem to wield hospital mergers or spin-offs as a backdoor way to close down hospitals.

Weaker hospitals are enticed with the assets of struggling hospitals to agree to a merger, on the one hand, but, on the other, crushing debts and steep financial losses are always part of hospital mergers.

Thus, the newly combined parent holding company are saddled with larger financial stresses, just like the 2000 St. Vincent's mega merger and the 2007 Caritas spin-off to Wyckoff.

Knowing how the mergers amongst the hospital components in the former Saint Vincent's Catholic Medical Centers of New York (SVCMCNY) have fared, is it any wonder why Stephen Berger advocates mergers for the hospitals that he really wants to target for closure ?

When it filed for bankruptcy, Interfaith officials told The New York Times that turning over operational control to Brooklyn Hospital without the state’s first promising the financing needed to keep Interfaith going would be tantamount to a covert plan to close Interfaith in a year and a half or so.

All these hospital closings are making it dangerous for patients in life-or-death medical emergencies. "Patients seeking care at New York hospitals spend nearly five hours in emergency rooms -- among the worst rates in the country. New York state hospitals rank 46th in the nation for the length of time in e.r.s, tied with Mississippi. (Source 6)

"The longer wait times may be due to recent closures of health facilities, such as St. Vincent's Hospital...." (Source 7)

Not only that, but all of the hospital closings compounded the damage to hospital infrastructure following the devastation caused by Hurricane Sandy.

“If the Times Square bomber had actually blown up his car, injured victims able to walk would have found the doors of nearby St. Vincent's closed and locked,” said Dr. Angela Gardner, president of the American College of Emergency Physicians. (Source 8)

And in all this time, has New York City Council Speaker Christine Quinn or New York City Council Health Committee Chair Maria del Carmen Arroyo ever held a hearing to find a way to fundamentally alter the way that hospitals are funded, the way that Dr. Satterfield has been seeking ?